KrishanaKumar Natarajan Interviews

The Indian IT industry did reach the US$ 100 billion mark by 2010, which is why when we started this year, we shared the aspiration of saying this industry should be a US$ 300 billion industry by 2020. Read More >>

IBEF: NASSCOM has expressed a vision for 2020 wherein the Indian IT industry will earn up to US$ 10 billion in revenues from products. How do you see this vision getting realised, and how do you view the progress of Indian companies in this regard? Mr Krishnakumar Natarajan: If you look at the Indian IT industry, it has achieved the success it has had till date because of a lofty aspiration that it set for itself. If you go back in time, when the IT industry was a US$ 100 million industry in 1998, NASSCOM set the vision of saying that by 2010, we would be a US$ 100 billion industry. At that time, many people thought that it was an asking, which was too steep. But when you look at the result, the industry did reach the US$ 100 billion mark by 2010, which is why when we started this year, we really shared the aspiration of saying this industry should be a US$ 300 billion industry by 2020. Now this growth is not going to come from what we have been doing in the past, because markets are changing. So one thing that NASSCOM is very cognisant of is that this growth will come from emerging areas like software products, it will come from internet and mobile businesses, it will come from a lot more of engineering, R&D and design, which will get done in India, as well as significant expansion of the domestic market itself. So your question on software products is very valid, because if you look at the change that is happening from a technology landscape, new disruptive technologies like social computing, mobility, analytics and cloud are becoming very, very mainstream now. Today, organisations are experimenting with it, but clearly over the next few years, people will start using it as a mainstream opportunity. And any time when a disruption happens, it becomes an opportunity for a new entrant to make a significant play in that. This is primarily what we are aspiring to do in the software products space also. I think in India, we would really like to build product companies, which are focussed on building social mobility, analytics and cloud, because it is an experiment happening all over the world. And we have enough of talented people who can think through on how enterprises can leverage these trends, and really build successful companies, which can then lead us to the US$ 10 billion target in terms of revenues that we seek to achieve with software products. Again, I think that it is important to create enterprises, which think of ideas and then they experiment. This also means building the entrepreneurial ecosystem is important, which is primarily the driver behind NASSCOM launching the 10,000 tech start up programme around seven to eight months back. That’s been very successful. We have had tremendous amount of positive energy and new entrepreneurs coming into the system, which in itself points out to a great future. Read Less >>

Driving non-linear revenue growth

The strength of the Indian IT industry has been in terms of doing business applications for customers. Using the knowledge that they have gained, I think that there is a tremendous opportunity for building platforms, which will manage a process end-to-end, and which will be driven by technology so that you get the benefits of automation and productivity. Read More >>

IBEF: The general trend in the initial years of the Indian IT industry has been towards services and linear relationship between man hours and revenue. What are the implications of this reorientation towards products and IP for skill requirements? How are Indian IT companies coping with the same? Mr Krishnakumar Natarajan: I think that again is a very good question because if you look at the Indian IT industry, in the first phase of growth, it has been a very linear growth industry. That means that the growth of the industry was tightly linked to people. It was good because we created three million direct jobs and close to around 10 million of indirect jobs. But going forward, I think just the linear model alone will not help the Indian IT industry reach the aspiration of US$ 300 billion. If you look at it from a customer angle, customers are demanding expertise. They really want people who understand their business and how do people leverage technology to solve the business problem. This is where I think applications of intellectual property, applications of unique solution sets that you have built become relevant. And they will certainly have a completely non-linear impact on how revenues come in. You could have a small product company of may be 10-15 people creating a unique cloud-based solution, which could translate into several hundreds of million dollars in revenue. And that’s completely non-linear in nature. So while products are one part of the non-linear change, and the transition that the IT industry is addressing, the other really big move is into what we call platform-based solutions. So the strength of the Indian IT industry has been in terms of doing business applications for customers. Using the knowledge that they have gained, I think that there is a tremendous opportunity for building platforms, which will manage a process end-to-end, and which will be driven by technology so that you get the benefits of automation and productivity, which in turn will result in the percentage of non-linear revenues significantly moving up. I think that on one hand while the technology disruption and new markets are giving an opportunity for the Indian IT industry to build business models that are more non-linear, clearly even reimagining the current portfolio of business and thinking about how you use platforms to consistently deliver superior services to customers at probably lower costs will also drive the trend of non-linearity. The key challenge in this whole transition is going to be how you are going to think of building a talent, which will think market backwards because I think pretty much in the first phase of the Indian IT industry, we have been an order taking industry. Customers have told us what they want to be done. We have then really scaled up and have been excellent at execution. But in the next phase, when you are thinking of building products and platforms, you need to have a view of the market, the problem and how will you solve the problem in a unique manner, which necessarily means that you have to think market backwards. And to orient our talent pool to think market backwards, I think it’s a big challenge. The second big challenge is to be more market-centric in your go-to-market rather than just being a backend player. What I mean by that is that you need to be far more savvy market people in terms of identifying the right target segment, messaging rightly to them and consequently delivering the best value to those customers. So the challenge on the talent front is real. It’s both on having technical people think market backwards as well as building a new ethos of marketing-led approach in our go to market efforts. Read Less >>

Next entrepreneurial wave

When there are new transitions happening on the technology front, we need to capture that big opportunity through innovation, and through building an entrepreneurial ecosystem. So in that context, what NASSCOM did around 8-9 months back was to launch a very ambitious initiative called the 10,000 tech start-ups Read More >>

IBEF: How do you see the entrepreneurial ecosystem and the manner in which it has progressed in the Indian IT sector over the past two decades? How is NASSCOM looking to support more entrepreneurs in the IT space going forward? Mr Krishnakumar Natarajan: See at NASCOMM, we believe that while we have been successful globally in the IT industry, continued success is really going to depend on building an ecosystem, which will have the large players who will have scale, the medium players who would really be experts in specific segments as well as smaller companies that are really going to drive innovation. So with that objective in the past 10 years, NASSCOM has focussed a lot on small and emerging companies. We have had dedicated focus on how do we mentor small and emerging companies. How do you teach them the way of doing business on a global scale and also provide them with dedicated platforms for market access as well as the ability to get new customers who will come and engage with them? But in the last two years, our thinking has also changed significantly on that. It is primarily driven by the thought that when there are new transitions happening on the technology front, we need to capture that big opportunity through innovation, and through building an entrepreneurial ecosystem. So in that context what NASSCOM did around 8-9 months back was to launch a very ambitious initiative called the 10,000 tech start-ups. The vision is that in the next ten years, we will create at least 10,000 technology start-ups in India, which will really be the foundation for us to create globally scalable businesses. I must say that the response to that has been outstanding. In the first round that we had, we had more than 470 entrepreneurs submitting their ideas and wanting to be a part of the programme and we chose around 30 of them. But what we are essentially doing here is not just necessarily trying to get ideas but really support them through the entire cycle of building a start-up. What I mean by that is that these companies that are shortlisted will then be subject to a round of due diligence by industry stalwarts and then we picked up ten of those companies. In one such programme that we had, four companies got angel funding the same day so that they could then start translating their ideas more into proof of concept. What we have also done in some locations is to start an entirely ready office infrastructure that we call the start-up warehouse, which we do in collaboration with the local state government. In this, any start-up that has an idea and goes through this process can just walk in on a cost basis and start their operations. They can try and focus really on the customer idea and really not worry about office space and the administrative hassles. They get that facility for around 6-7 months by which time they are required to get the proof of concept out and get their first customer so that other companies can come in. We are also getting at various locations industry experts who have been there and done it to mentor these companies so that we can accelerate the whole process of getting these companies on to the next orbit. So there is a whole lot of enabling activity, which NASSCOM is doing so that the whole technology entrepreneurial ecosystem gets accelerated. And if we look ahead say 2-3 years from now, we must see India as being one of the major hubs across the world where in emerging technology areas, there are real high value start-ups, which are being started and which are delivering value to their customers. Read Less >>

Role of IT for India

There are enough examples of Indian companies leveraging their global expertise and experience to bring in technology solutions, which are relevant in the Indian context and consequently you are already seeing the benefit and productivity, which technology can bring in to these areas. Read More >>

IBEF: While the IT industry in India is largely export-oriented, we are seeing IT players increasingly looking to develop India-specific products and solutions. How do you see the industry contributing to economic growth and sustainability for India going forward, and in which areas will the role of IT be most critical? Mr Krishnakumar Natarajan: I think it is very important, because in the first twenty years, the Indian IT industry has helped global companies gain competitiveness by helping them leverage technology. We are slowly translating that experience into the domestic market. There are standing examples today of how we have really created technology-driven solutions, which are solving a live citizen or a social problem even today. Just to quote a very specific example, the bold initiative of giving a unique identity to every Indian – the UID – is a project, which several developed countries are watching both with awe as well as with intrigue, because many of them haven’t even attempted such a large initiative. Again, as a part of my role at Mindtree, we were closely engaged in building that solution and today that is the largest database across the world and it is scalable. Already, a substantive number of people have been enrolled on it and it is getting leveraged to deliver social benefits to the right people. So it is meeting the social objectives that have been set for it. If you take the case of income tax, I think the level of automation in the Indian income tax function is probably the best in the world. If you take passports, where on a per passport basis, TCS runs the whole operation and it is highly automated. So I think that there are enough examples of Indian companies leveraging their global expertise and experience to bring in technology solutions, which are relevant in the Indian context and consequently you are already seeing the benefit and productivity, which technology can bring in to these areas. Certainly, one area that NASSCOM considers to be a key imperative and where we are putting a lot of effort and bringing in the right expertise into it is to really say how NASSCOM can play a role in trying to transform one or two areas where clearly the country needs help. You can take an area like the judicial system. Today, I think one of the key things about our judicial system is the number of cases, which are in the backlog mode. The fact is if you bring in the expertise that the Indian IT industry has on business process management, bring in technology to automate and ensure that they run efficiently, we can make a very significant impact. This is equally true in the case of healthcare and education. So clearly, in the next phase at NASSCOM, we are committed to ensure that we leverage the global expertise that we have obtained to bear on social or citizen-related issues and to significantly transform that so that India will not necessarily be a follower, but it will be a thought leader in building those technology solutions and implementing them in a productive and scalable manner. Read Less >>

Beyond cost arbitrage

Overall if you look at it, probably 98 per cent of Fortune 500 companies do business with the Indian IT industry. It is not just because they are saving 20 per cent to 30 per cent costs. Many of them have moved beyond that. Read More >>

IBEF: India’s IT industry has contributed much to the Indian economy over the years. How has it contributed to global economies in your view? Mr Krishnakumar Natarajan: The Indian IT industry has changed its role on how we engage with customers over the last ten years. We started twenty years back with a premise, which was largely based on leveraging the labour cost arbitrage opportunity, which really helped the company scale up and gain critical mass. But in the last six to ten years, a number of Indian companies have moved beyond just cost arbitrage as a differentiator to really expertise driven solutions and services, which they offer. This necessarily means that they are engaging with customers to help them become more competitive in their business. For a specific customer, it could mean that they are really helping them scale revenues or there are global customers where Indian players are helping those companies become diverse and move to different global markets to making them far more competitive by helping them provide data on a real time basis so that they can take actions, which are in the context of what is right for the business. Overall if you look at it, probably 98 per cent of Fortune 500 companies do business with the Indian IT industry. It is not just because they are saving 20 per cent to 30 per cent costs. Many of them have moved beyond that. They are engaging because Indian IT companies are helping them transform their business and consequently make them far more competitive in their own markets. Read Less >>

Contributing to local economies

If you just look at the percentage of overseas employees as compared to the total workforce, that has itself grown around four-fold in the last three to four years. Read More >>

IBEF: Perception issues with India’s IT sector continue to crop up in overseas markets, particularly the US. One outcome of this is the visa issues faced by Indian players. How do you see these perception issues getting addressed in the coming years? Mr Krishnakumar Natarajan: See what I do believe is that since the Indian IT industry is really unique, because if you look at other global industries, they have first had a significant presence in the domestic market before they ventured overseas, which is true of the Japanese automotive industry. They were extremely successful in Japan before they ventured out. But the Indian IT industry is probably a unique example of an industry that gained global success and now is certainly rethinking on how we could leverage that to make a significant impact on the domestic market. And I think economies and markets are also changing. I think the reality is that if we access a market and deliver services, it is a realisation that we need to be more glocal, beyond being just global. This necessarily means that we need to be relevant to the local economy. Also, customer needs are driving us to become more glocal. As the Indian IT industry is transitioning to do more business critical work, customers expect us to be more close to them. This necessarily means that you need to be in the same time zone, you need to have your local employees or manpower base, which understands the customer’s business and which can quickly react to any needs, which the customer may have. So I think that the Indian IT industry is moving fast on that. If you just look at the percentage of overseas employees as compared to the total workforce, that has itself grown around four-fold in the last three to four years. So I think that while one would look at the visa issues as being one of the challenges that we need to address, the business itself dictates that you need to be, as you transition into doing more critical work for the customer, be more local and be more relevant to the local economy. To that extent, that is really the response of the Indian IT industry and they have been moving along this direction over the last couple of years. Yes, an environmental change like the visa is probably going to accelerate that. But clearly, it is more to do with the business needs of the customer and the environment has made it accelerated a little more. Read Less >>

Perspectives on Indian Economy with Mr Krishnakumar Natarajan, Chairman, NASSCOM and CEO and MD, Mindtree Ltd

Krishnakumar Natarajan, Chairman, NASSCOM and CEO and MD, Mindtree Ltd has a rich experience of over 30 years in the IT industry and is known and respected globally. He has played a critical role in setting up Mindtree's operations in US and led expansion into Europe and Asia Pacific, besides enabling a transformation of the company's IT services business. He also chairs the 'emerging companies' forum at NASSCOM, which endeavours to develop a globally competitive IT ecosystem in India, which will contain both, large and emerging companies. In this interaction with IBEF, Mr Natarajan talks about NASSCOM's vision for the IT industry in 2020, the focus on products and platform-based solutions and the drive towards building a strong entrepreneurial culture in the industry going forward.

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